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The PFI Scandal

At our recent public meeting Mary Burnett gave this sobering and terrifying summary of the PFI scandal.

I want to talk about the scandal of Private Finance Initiative, PFI. How PFIs have turned our hospitals into investment and profit making opportunities for private companies and big banks. And how I think this amounts to the most insidious privatisation of our health service, that is barely talked about either in the media, or by most of our politicians.

When WX, Newham and Barts & the London merged in 2012 it became the biggest hospital Trust in the country. With the biggest PFI – used to build the new Royal London and to redevelop Barts. These hospitals cost just over £1bn to build, but Barts will pay more than £7bn over the 42 years of the PFI contract.

And Barts now has the biggest hospital debt in the country – over £93m.

In 2002 George Monbiot wrote in “ Private Affluence, Public Rip- Off” “ A study by a consultancy company which works for the DoH shows that every £200m spent on PFI hospitals will result in the loss of 1000 doctors and nurses. The first PFI hospitals contain some 28 fewer beds than the ones they replaced”.

And in an article in the Guardian in 2013 John Lister wrote : “ PFI is the reason why – no matter how many mgt consultants are paid £1000s a day, or what horrific plan an administrator might hatch up – there is no solution within the Barts Trust without wholesale cuts in services and staffing that would potentially put patient care at risk”.

And that’s exactly what’s happened. Before it was built, the 2 top floors at the Royal London were mothballed. There are now plans to have a wing there for private patients – despite ambulance queues at WX.

And in 2013/14 we saw posts cut, staff downbanded, Charlotte’s dismissal, staff leaving, a growing culture of bullying, rising agency costs, – all culminating in the CQC report on WX and Barts → special measures.

So why do PFIs destabilise hospitals? Why are they such a scandal?

PFIs involve private companies, and investment banks raising loans to build hospitals ( or schools, roads, prisons ).The companies/banks then own the buildings – at least for the duration of the contract, and any services or maintenance are tied into the contract. It’s been likened to taking out a mortgage for your home and having any maintenance, repairs, decoration, provided by one specified company, and tied into your mortgage contract.

So at Barts, Skanska and Innisfree – a construction and investment company respectively – own and operate the PFI. Barts leases the hospitals, and pays Skanska and Innisfree a charge that includes capital costs, interest repayments, and the cost of the services. This year that charge is £2.5m a week. In 10 years it will increase – because the interest is index linked – by a massive 26% to £3.2 m a week. That’s the pressure that results in cuts.

And across the country we have 118 hospital PFIs and 720 PFI contracts in total.

So what’s the scandal?

1) The interest being paid to banks and private investors is at least 1.5 – 2 % higher than if the hospital had been funded through govt borrowing. And for some of the loan, the interest is as high as 15%. Barts is £93m in deficit this year, and paid £43m in interest alone on its PFIs.

2) And there’s a whole market in companies refinancing the debt and selling on their shares in PFIs. Between 1998 and 2010 there were 166 transactions in shares held by companies in health PFIs. Not only does this show the confidence investment banks and business have in the profits they can make, it also illustrates, with alarming clarity, how much our hospitals have become enmeshed in the financial markets. And the amounts being made can be quite staggering. Carillion, for example, has had shares in more than 17 hospital PFIs and boasts they lead the market in selling them on. They made a cool £12m on a £4m investment in a hospital in Kent, and nearly £20m on a £12m investment in Portsmouth.

3) And profit making doesn’t end with high interest rates or selling shares. The services provided through the PFI contract can be a nice little earner for those involved.

– Skanska and Innisfree took £22.7m in 8 years just for buying in the services as part of the Barts PFI contract.

– The contract at Barts to provide services like portering, cleaning and catering is worth £30m a year to Carillion

– and last year Barts managed to withdraw 3 services from the PFI contract and saved 50% on the costs.

4) And when profits drive service provision, it’s no surprise that staff and quality can suffer. Carillion is mired in controversy at the Gt Western Hospital in Swindon, where it provides, under a PFI contract, like at Barts, services like portering, catering and cleaning. There’s been such problems with the services that the Chief Exec of the Trust said in September 2014 : “ concerns about food hygiene and cleanliness have posed a potential risk to patients, visitors, and staff which is completely unacceptable”. The Chief Exec added : “ there remain serious concerns about Carillion’s ability to deliver services to the required standard”

Over the next 5 years, the cost of the Barts and Royal London PFI will increase by £14m a year – 11%

And in the next 5 years, Barts has to make cuts of £324m – 5% of its turnover.

It’s not do-able.

I believe our hospitals should be places where sick people, at their most vulnerable, can get good care and treatment. Where staff are valued, and where management can focus on the quality of patient care, not on achieving impossible financial targets.

PFIs are haemorrhaging money away from that patient care. They have turned our hospitals into investment and profit making opportunities.

That is the scandal of PFIs.

So What Can We Do?

– Tell people you know about the scandal of PFIs. Break the silence around PFI.

– Find out more – there’s plenty of information out there and good websites to be found on the back of our leaflet

– Sign our petition calling for an end to the PFI at Barts – there are paper copies at the back or you can sign on line on 38 degrees website

– Join our local campaign or the Barts pfi campaign – there are details on our leaflets.

NHS In Stitches is brought to you by an army of volunteers including some of Britain’s best comedic talents: Lucy Porter, Stewart Lee, Junior Simpson, Mark Steel, Wendy Wason, Nish Kumar, Francesca Martinez, Slim, Kerry Godliman, Pappy’s, Rufus Hound, and Ed Bennett. On the 28th March 2015 at the Hackney Empire in London, the all-star line up lent their (often quite loud, always hilarious) voices to our call to stand up for the nation’s proudest achievement and most treasured institution: Our NHS.

This is an awareness raising campaign. Please watch and share widely.

This 37 minute film is based on the 2 hour live event. It features a selection of the fantastic stand up sets, sketches, short films from the night. It also includes some back stage interviews with a few of the comedians.

Please note, we would mark this video with the YouTube rating of ‘Strong Language’:

Strong language: Contains some expletives and profanity; however such words are infrequent and not used in a sexual context. This level is appropriate even for content with expletives and profanity bleeped out. It is also appropriate for suggestive dialogue, sexual innuendo, discussion of adult themes, and the expression of strong views and opinions that viewers are likely to find offensive, disrespectful, or otherwise controversial.

NHS CAMPAIGN GROUP’S OPEN LETTER TO WALTHAM FOREST MPs

To: Stella Creasy MP
John Cryer MP
Iain Duncan Smith MP

We, as members of Waltham Forest Save Our NHS, are shocked by the latest CQC report on Whipps Cross Hospital. We call on you, our elected representatives to address the impossible financial position in which Whipps now sits. We ask you to address Barts’ private finance initiative (PFI)and work together to remove this debt burden which threatens the continued existence of our local hospital.

Our much loved hospital has been tragically destabilised; it is a victim of both the destructive effects of the Health and Social Care Act (HSCA) and of under-funding. These problems need dealing with at a national level. However, there is one overriding factor behind this crisis which you can help to resolve by working together now: the PFI deals that weigh so heavily on Barts Health Trust (Barts). PFI contributed to Barts’ deficit leaping to £93M in recent months. The PFI costs are unmanageable, unreasonable and growing!

We urge you not to use our NHS for political point-scoring and to work to start resolving the problems that face Waltham Forest’s NHS services. We are confident that other borough residents will wish to join us in this call. Barts is England’s largest hospital trust, has the country’s biggest PFI and its deepest deficit. PFI allows government to keep building costs off its balance sheet and allows business to make profit without risk. None of this is good news for Waltham Forest’s residents.

Barts spends over £2M a week for its PFI deals, an unaffordable amount, far in excess of market rates. Government funding for NHS building projects would have offered much better value. Both Labour and Conservatives have promoted PFI use over the past 20 years. All NHS hospitals are inadequately funded; faced with under-funding, disintegration caused by HSCA and the exorbitant PFI costs, Barts chose to make £58M of cuts last year.

In a vain attempt to save money, Barts management enforced mass redundancies and a demoralising down-banding of staff, which led to the disastrous consequences detailed in the CQC report. Bullying of staff and attempted cost savings resulted in an exodus of experienced skilled staff, low morale, an inability to maintain staffing levels, and a doubling of agency costs, all of which could only have a detrimental impact on patient safety. To add insult to injury, Barts paid millions to private consultants for ‘advice’ rather than listen to its staff.

PFI contracts cause our hospitals to outsource key services even when outsourcing is the more expensive option. Barts Health saved £4M per year by bringing some of the services previously provided under the PFI back in-house. A broader cost-saving exercise must now be implemented, bringing outsourced services in-house across the whole Trust.

East London suffers significant levels of poverty and deprivation, factors that lead to ill health. Funding must be increased and services created that will meet the needs of East London’s growing population. Instead, local health services have been told to make an 11% cut over the next five years. It is clear that services are being sacrificed on the altar of PFI and that PFI costs must be annulled to safeguard the health of the local community. Arguably there is no greater issue affecting the welfare of your constituents. Faced with a perfect storm of HSCA, under-funding and PFI, Barts management cannot see off the PFI problem on its own. As our elected representatives it is incumbent upon each of you to work together to restore NHS services to your constituents, the people who pay not only for the NHS, but for you to properly represent our interests.

We call on you to put aside your political differences and work with Barts and the PFI companies to get rid of the onerous burden of PFI costs. We can then start to restore order at the borough’s much-needed hospital, Whipps Cross and improve health services across Waltham Forest.

Evidently with the general election looming, time is of the essence. We look forward to your response.

In October 2013 a group of health campaigners formed Drop the NHS Debt to start a campaign on the scandal of PFI contracts in the health service. We have put together a website directed specifically at health campaigners across the country providing lay summaries of the way PFI works, possible ways of reversing PFI, and a ‘toolkit’ enabling ordinary campaigners to find out the extent and nature of profiteering through PFI contracts at their local hospital. In turn this information would form the basis of local campaigns against PFIs and we suggest a possible leaflet for campaigners to use.

Our website is still developing but we feel there is enough there to launch it. Please go to:

We would welcome any support and feedback you can give and we hope you feel able to reference our website from yours. Please do also announce the website to your contacts and local group via your website or email.

If you have any queries please reply to this email, or ring me on 02089257818. Or you can contact the website directly at info@dropnhsdebt.org.uk

Monday 13 October from 7 am

Whipps Cross Hospital main entrance ( Whipps Cross roundabout)

Join us on the picket line for a while, bring food and messages of support.

NHS workers have been through 5 years of pay freezes and pay caps. It’s had a massive impact on their living standards, Inflation has already wiped out 12 percent of the average NHS worker’s pay since 2011. Workers in the bottom two pay bands are paid less than the Living Wage and 70 percent of NHS staff are not due a pay rise for another two years.

On Monday 13 October Nurses, Midwives and other vital health workers.will be striking for fair pay across England, from 7am to 11am with emergency cover . This will be followed by 4 days of action short of strike action from 14-17 October for the rest of that week, where health workers will take their break, something many of us never get to do.

Lets show our support for health workers and our NHS which is threatened by cuts and privatisation.